A prior settlement via mediation was validated by the arbitrators, resulting in the unanimous Panel granting a Motion to Dismiss.
One of the few valid grounds for a successful Motion to Dismiss before the end of a party’s case-in-chief appears in FINRA’s Customer Code of Arbitration Procedure Rule 12504(a)(6)(A), where: “the non-moving party previously released the claim(s) in dispute by a signed settlement agreement and/or written release….” This was precisely at issue in Drew v. Morgan Stanley, FINRA ID No. 21-00833 (Boca Raton, FL, Dec. 2, 2021), where the All-Public Panel grants Morgan Stanley’s motion to dismiss.
Evidence of Prior Mediated Settlement is Admissible
Lisa Drew filed the $3+ million arbitration as Successor Trustee of the Tullio and Maria DeFilippis Joint Revocable Trust, as Personal Representative of the Estate of Tullio DeFilippis, and individually. The causes of action related to: “the confessed conversion and mismanagement of assets in Claimant’s account by Respondent’s former associated person.” Morgan Stanley moved to dismiss based on a prior mediated settlement. Drew countered that evidence of the settlement was inadmissible attorney work product, which was denied by the Panel. The main argument? “Respondent asserted, among other things, that reference to settlement documents is permissible for the purpose of enforcing a settlement, and that both Florida and New York law allow for emails between counsel to constitute valid settlements.”
Motion to Dismiss Granted
Having accepted the evidence, the next issue was whether there had in fact been a settlement. The unanimous Panel grants the Motion to Dismiss filed under Rule 12504(a)(6)(A), finding that there had indeed been a validly executed settlement agreement. On what basis? “Respondent asserts the parties previously entered into a settlement agreement at mediation, which was memorialized through material terms confirmed and accepted via an email acknowledgment by Claimant’s former counsel. Claimant asserts the email signed by Claimant’s counsel is not enforceable under the FINRA Rules as a written agreement and release. Upon reviewing the pleadings, FINRA regulations and opinion guidance, case law guidance, evidence and hearing oral arguments by the parties' counsel, this Panel unanimously finds the electronic signature acknowledging agreement of the material settlement terms is sufficient to enforce the mediated settlement agreement and release in this matter. The material terms set forth in the mediator's email dated December 22, 2020, provided for a settlement and release of all claims, payment of $425,000.00, standard confidentiality provision, Morgan Stanley to pay the mediator's fee, which were accepted by Claimant and the Trust via electronic signature by Claimant through her counsel. Thus, the Panel finds there was sufficient evidence to establish a settlement of this matter between the parties.”
(ed: *Seems right to us. **Morgan Stanley had evidently not yet paid the $425,000 settlement, because the Award adds: “The settlement agreement entered into by the parties is hereby enforced and the parties shall comply with its terms in full, which includes Respondent Morgan Stanley making the $425,000 payment to Claimant of the settlement amount in exchange for a full release of all claims in accordance with those material terms.”)
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